Oscillator zone

RSI (Wilder) is well known and well followed technical indicator. It is an Oscillator that signals strength or overbought / oversold conditions. Below is a chart of $SPX going back to 2006. Notice how the RSI (Wilder), 14 days is toward the upper end of the zone, left shaded area. It went up and down but the overall picture was that it stayed in the upper zone. Compare that to the right shaded area. The glaring difference is of the Bear Market's influence on this indicator. See how it now shifts lower. More action is at lower zone.

$SPX daily with RSI



The chart below is the same chart but emphasizing the last two years. Ever since the significant bottom of March 09, 2009, RSI is trending higher. The key reading will come during and after the next decline. Will the RSI oscillate again to the lower Zone? Or will it make a higher low and start oscillating in the higher zone? The later condition will signify the shift away from Bear Market. This zone shift may not be a trade able signal by itself because of its lag but it does gives us the visual picture of the effect of the overall market on the oscillator zone.

In short, be cognizant of the overall market posture when looking at the oscillator's move.


$SPX daily with RSI